The social messaging and media company is set to cut 20% of its workforce, with layoffs set to begin Wednesday, the Verge reported, citing anonymous sources.
A Snap spokesperson declined to comment. As of the end of June 2022, Snap had 6,446 full-time employees, up 38% year over year.
As part of the layoffs, Snap’s advertising group will be restructured, per the Verge report. That comes as Netflix just hired Snap’s two top ad execs — chief business officer Jeremi Gorman and VP of sales Peter Naylor — to lead advertising efforts as Netflix gears up to launch a cheaper, ad-supported plan in 2023.
Teams at Snap that will be most affected by the layoffs, per the Verge’s report, include the team working on ways for developers to build mini-apps and games for Snapchat; Zenly, the social mapping app Snap bought in 2017; and Snap’s hardware division (which just killed off the Pixy selfie drone).
In announcing disappointing Q2 results, Snap said it intends to “substantially slow our rate of hiring, as well as the rate of operating expense growth. We will reprioritize our investments and drive a renewed focus on productivity.”
For Q2, Snap reported revenue of $1.11 billion, up 13%, and a net loss of $422 million (an adjusted net loss of 2 cents per share), missing Wall Street forecasts. Snap did not provide guidance for Q3 sales or earnings, citing “uncertainties related to the operating environment,” said said in its investor letter that so far in Q3 revenue is approximately flat on a year-over-year basis.
In the Q2 letter, Snap said “demand growth on our advertising platform has slowed significantly,” saying that in some cases advertisers have lowered their bids per action to reflect their current willingness to pay. In addition, the company said it is seeing “increasing competition for advertising dollars that are now growing more slowly.”
Snap’s most recent mass job cuts came in 2018. In March of that year, the company laid off about 220 employees, which Snap said would save $34 million per year in salaries and taxes in addition to a one-time benefit of $31 million related to stock-based compensation forfeitures.